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Iberdrola chief backs EU Commission efficiency target

January 27th, 2014

There has been a mixed response to last week’s European Commission announcement on renewable and emissions targets, with Iberdrola’s chief among those firmly behind it and environmental groups expressing discontent.

Iberdrola’s (BMAD: IBE) CEO, Jose Galan believes the decision by the European Commission to set a 40 per cent target for carbon emissions reduction by 2030, compared with 1990 levels, and to allow member states to work out their own means of achieving the target is the correct one.

The European Commission has stressed the need to cooperate on a regional rather than national basis and ultimately the regions to connect up providing a pan-European approach, in order to achieve the target.
galan iberdrola
In an interview with Bloomberg, Mr Galan said that previous policy had backfired, with emissions growing despite the heavy promotion of renewable energy.

“Europe has the most expensive energy because of renewable promotion yet we are burning more coal than ever. So you find that Germany and Spain are increasing emissions as a consequence of policies, which were not well designed.”

“That’s why it’s better to leave it up to the individual member state how they can go about achieving the 40 per cent target. All we have to focus on is one single target, which I think is the most important thing.

A spokesperson for the European Commission, who wished to be unnamed, told Power Engineering International that the commission, while conceding that national targets were an easy way of legally dealing with an infringing member state, believed the new legislation provided a more appropriate mechanism to achieve its efficiency target.

“If you look at the electricity market in Europe - to be effective and continue to be effective, it cannot be national- you’ve got to have an electricity market that is at the very least regional, preferably pan-European. Otherwise we end up investing in unnecessary capacity, we avoid the possibilities of sharing balancing responsibilities and it just increases the costs enormously for Europe.”

“Again one hopes that the politics will align behind the common sense.”

The Commission spokesperson pointed to the example of Norway and Sweden, who by joining up their electricity market, thereby reduced the costs in both markets, and also compared the Irish and Danish experiences in that regard.

“The renewable policy in Denmark is about half the cost of the same renewable policy in Ireland and the reason for that is that is Denmark is linked in to a much bigger pool in terms of a regional electricity market, therefore has a much wider range of possibilities in terms of balancing their system. Ireland, because it doesn’t have interconnectors and cannot balance outside of the island, has to basically fund all of the balancing within the island, which makes it very expensive.”

Germany’s environment minister also expressed positives about the announcement, with the hope that a binding target for renewables be restored in future.

Federal Environment Minister Barbara Hendricks said the 40 per cent target is "a good base from which to reach a decision in principle in March at the European Council."
"In addition, we need ambitious and binding targets for renewable energy and energy efficiency,” she added. “For this is necessary to economically achieve our long-term goal, a reduction of 80 to 95 percent by the year 2050. Within the framework of an international agreement, I can also imagine an EU contribution of more than 40 per cent. Because we Europeans want to remain a leader in the global fight against climate change.”

Despite the environment minister’s upbeat pronouncements, Germany will miss its target to cut carbon emissions by 40 per cent by 2020 amid a boom in lignite-fired generation throughout this decade, the head of a key energy advisory panel for the German government told Montel, the European energy market intelligence agency.

“If one looks at the various estimates, everything suggests we will miss our CO2 targets,” said Andreas Löschel, head of a monitoring commission for the energy transition, a panel of experts that reports to Germany’s economy and energy ministry.

“We have to reckon with more lignite [and] we will have to live with high emissions in Germany for the next years,” Löschel said on the sidelines of the Handelsblatt energy conference in Berlin.

The EU will need to strengthen the EU emissions trading scheme as a “lever” if it is to have any chance of curbing lignite-fired production in the medium term, Löschel said.

He said the bloc must set a target “markedly” higher if carbon prices are to encourage businesses to shift away from the most polluting technologies.

Meanwhile environmental lawyers Client Earth called the Commission’s 2030 proposals present “a worrying vision for climate governance.”

In an email statement the organisation said the document “is defined by a dangerous lack of emission reduction ambition and a regulatory model destined to increase uncertainty about Europe’s commitment to the EU’s energy objectives.”

“We strongly reject the proposal to effectively drop legally binding Renewable Energy Systems (RES) targets for 2030, introduce a non-binding and unenforceable system of national climate and energy plans, and the Commission’s failure to explicitly support a binding and ambitious energy efficiency target as a core element of the 2030 governance architecture.”

Sharon Turner, head of ClientEarth’s Climate and Energy programme, said: “As presently conceived, core elements of the Commission’s proposals for climate and energy governance reform represent a significant retreat from a legally binding and effective system of climate governance. This is underlined by the fact that they are not presented in a formal ‘White Paper’ which normally signals Europe’s intention to legislate.”

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